The S&P/ASX200 had fallen 13.3 points by midday Thursday, down 0.17 per cent to 8,580.9, as the broader All Ordinaries lost 18.1 points, or 0.2 per cent, to 8,876.1.
The bourse shrugged off a positive session on Wall Street after US jobs data narrowed bets on a December US interest rate cut, and Wednesday's Australian economic growth figures set the scene for higher borrowing costs by the end of 2026.
"While the softer headline (growth) number initially eased fears of a Reserve Bank rate hike in 2026, some digging below the surface showed strong private demand ran down inventories, sparking fears of capacity constraints and building inflationary pressures," IG market analyst Tony Sycamore said.
"By the end of the day, the Australian interest rate market was pricing in a full 25 basis point RBA rate hike by December 2026."
The Australian economy expanded by 0.4 per cent in the September quarter, delivering annualised growth of 2.1 per cent - its fastest pace in two years.
Only three of 11 local sectors traded lower by lunchtime, with raw materials outperforming the market on the back of record copper prices.
The surge supported large-cap giants such as BHP (up 2.3 per cent) and Rio Tinto (up 2.8 per cent), mixed miner South32 (up 4.3 per cent) and copper plays Sandfire Resources and Capstone, up more than four and seven per cent respectively.
Capstone was the top-200's best performer and has rocketed 90 per cent higher since May.
Gold stocks edged lower as the precious metal consolidated near $US4,213 ($A6,375) an ounce.
A 0.4 per cent lift in energy stocks tracked with a broad sector improvement as oil, gas, coal and uranium producers crept higher on recent momentum.
A 0.7 per cent boost to Australia's tech sector came as WiseTech continued higher after highlighting artificial intelligence efficiencies to shareholders on Wednesday, and followed an uptick on Wall Street's tech-heavy Nasdaq.
Interest rate-sensitive sectors led the losses, with real estate stocks tumbling 2.5 per cent, consumer-facing segments down 1.1 per cent each and industrials slipping 0.6 per cent.
The heavyweight financials sector also weighed on the bourse, down 0.5 per cent, with all big four banks in the red and Westpac leading the losses with a one per cent fall to $37.03.
Commonwealth Bank shares slipped 0.7 per cent lower to $150.97, on par with their lowest value since April and 27 per cent short of late June's record $192 high, after an apparently limited impact from start-of-month passive inflows from ETFs and pension funds.
In company news, Vulcan Energy shares tanked by more than 30 per cent after a 398 million euro ($A710 million) equity raising, issuing roughly an extra 178 million shares.
Imaging software provider Pro Medicus dropped at the open but recovered to be steady by midday after confirming a cybersecurity breach involving the unauthorised access of an email inbox by an unknown third party.
News Corporation shares ground 0.6 per cent lower after it unloaded its whole stake in ARN Media overnight.
The Australian dollar is buying 66.10 US cents, and trading at five-week highs, up from 65.83 US cents on Wednesday afternoon, as expectations for US and Australian monetary policy diverged.
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